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Lionel Messi juggles a soccer ball, his father is said to have juggled his earnings to avoid taxes - Image credit: Getty Images via @daylife

The Economic Crime Unit of Barcelona has accused Argentine superstar Lionel Messi, and his father, of tax fraud between 2007 and 2009, which could potentially land them in jail. According to the prosecution, Messi’s father, who is also his manager and agent, created shell corporations in tax havens and then transferred his son’s imaging rights between 2007 and 2009, only to sign further deals with other shell-corporations to avoid paying taxes on €4.165 million ($5.53 million) in income.

A troubling accusation for the world’s best soccer player, and the sport’s foremost star. Messi, who netted $41.3 million in the year to June and was the world’s tenth-highest-paid athlete, must prove that his father didn’t engage in a complicated scheme to hide his earnings from Spanish tax authorities, where he currently resides.

UPDATE:In a letter signed by Messi’s “legal and fiscal council,” lawyer Angel Juarez rejected the accusations, noting he is responsible for the star’s tax filing and adding they will take all the proper legal steps to put the situation to rest. Juarez confirmed they hadn’t been contacted by the prosecution.

According to prosecutor Raquel Amado, Jorge Horacio Messi, father and agent of the FC Barcelona striker who was the team’s leading goal scorer in La Liga beating Cristiano Ronaldo by a wide margin, used shell corporations in Belize and Uruguay, notorious tax havens, to sign deals with other shell corporations he apparently owned domiciled in the U.K. and Switzerland to hide his son’s income for three consecutive years.

The prosecution has made it clear that Jorge Horacio was the architect of the maneuver, having in 2005 instructed a “third-party” to open a first shell-corporation; at 17, the Barҫa player was still a minor.

While Messi’s agents and marketing teams weren’t immediately available for comment, a release issued through the athlete’s FacebookFacebook page noted they had “just known through the media about the claim filed by the Spanish tax authorities.” Messi claims to have “never committed any infringement” and to have “always fulfilled all [his] tax obligations, following the advice of [his] tax consultants.” Representatives of FC Barcelona hadn’t responded our request for comment at the time of publishing.

The idea, the prosecution said (and I translate and paraphrase), was to channel funds from the countries in which sponsors or firms were paying Messi to the shell-corporations without being subject to taxation, and with “total opacity” in the face of the Spanish tax authorities as to who was truly receiving those papers, who was “none other than the accused, Lionel Messi,” in the words of the prosecutor. Relevant facts were also “omitted” from other tax documents in order to hide from Spain’s tax authorities that these rights were being ceded to corporations domiciled elsewhere.

Messi and his father are accused of three counts of tax evasion. According to Spanish law, if found guilty they could face between two and six years behind bars, and a fine worth more than $1 million.

By our latest tally, Messi, who counts with big name sponsors including AdidasAdidas, PepsiCo, EA Sports, and Audemars Piguet, made $20.3 million in salary and winnings in the 12 months to June, and $21 million in endorsements. Even though he’s won FIFA’s world player of the year for a record four consecutive years, Messi still trails superstars Cristiano Ronaldo, backed by Nike, and David Beckham, also with Adidas, in earnings.

Beyond Messi, it’s his club, FC Barcelona, that should be worried. Barҫa is the world’s third most valuable soccer team, worth $2.6 billion. The recently minted Spanish champions, like most of the top teams, depend on their superstars to deliver on pitch performance, which ultimately brings in broadcasting, commercial, and match day revenues, the three legs of soccer teams’ business model. Failing to advance into the later stages of the Champions League, or being a contender for La Liga, would greatly damage Barҫa’s earning power.

While it doesn’t seem likely that Messi will end up behind bars, the accusations become all the more troubling given the difficult fiscal situation of Spain’s regional governments. Across Europe, governments have pushed to limit the incredible earnings of soccer players as these have gone through the roof. In Spain, the infamous Beckham law became hugely controversial after it allowed wealthy individuals to pay lower taxes, while in France, budget minister Jerome Cahuzac said he was “disgusted” by Swedish striker Zlatan Ibrahimovic’s astronomical wages.

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